Not-Just-Ok ! A 5-Day Writing Challenge - Devaluation And Effects | #club75 | 10% to SteemAlive

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There are so many factors why a country or countries have a deficit in the general income they make in a year of successful businesses. Some go into loss, while other make huge profits.

In today's post, we will be discussing on Devaluation. You might confuse Devaluation to Depreciation. Let's find out the meaning between the two of them.

DEVALUATION

Devaluation is the proper decision made by the government to reduce the value of it's country's currency. In other words, it can be defined as the reduction in the exchange rate of a country's currency vis-a-vis (in relation to) other currencies.

Example
Presently, 1USD = 415.96NGN

A further reduction will make 1USD = 1,250NGN. This is known as Devaluation but we don't as for that.

DEPRECIATION

Depreciation is the fall on the value if a country's currency without the decision of the government. This results in high prices if goods and services.

The outstanding difference between Devaluation and Depreciation is the involvement of the government's decisions. In Devaluation, the government purposefully decides to reduce the country's exchange rate. While in Depreciation, the currency looses it's value without the decision of the government.

EFFECTS OF DEVALUATION ON A COUNTRY'S ECONOMY

The following are some effects in which Devaluation had on the economy of a country.

• Cheaper Export Rates: When the value of a country's currency is lowered, other countries will find trading more cheaper in such a country

• Higher Cost Of Imports: The cost of importing goods and services into a country will be on a high side if the value of the county's currency is lower than that of the foreign country.

• Inflation: This is the increase in the general prices of goods and services due to high volume of money in circulation. Devalued currency will purchase fewer goods with large amount of money.

• Improves Economic Development: Devaluation makes exports relatively cheaper to foreign customers and causes imports more costly, thus, helping the country to improve in it's development a d production sectors.

• Aids Balance Of Payment: Balance of payment is the comparison between the inflow of money and the outflow of money into a country. When only exports are promoted, there will be positive balance of payment which reduces deficit.

• Stimulation Of Demand: More people and customers will want more goods and services at that particular price when the currency is lowered.

REVIEWS

Below are some do's and don's which a country should follow to maintain a good economy.

° A country who is dependent on only one sector of production will suffer greatly from Devaluation.

° A country which is dependent solely on imported goods should kick against devaluing it's currency.

° Countries which have poor industrialization and production facilities and other amenities will suffer inflation and recession front a depreciated Currency.

° Borrowing from friendly countries or International Monetary Fund (IMF) and the world bank will aid balance of trade.

° Grants and assistance rendered by foreign countries will go a long way I the growth and development of a country's economy.

I really want to use this opportunity to appreciate all the economists in our steemit ecosystem.
Things are hard or easy based in these above factors. Business & Economics

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